UBI Banca SpA

Strong franchise and market position in northern Italy. Prudent business strategy. More conservative risk appetite than the peer average. Limited capitalization by our measures. Low profitability compared with peers. Coverage of nonperforming credit is improving but still lower than the system average. S&P Global Ratings' stable outlook on Italian bank UBI Banca SpA reflects balanced risks to our ratings over the next 24 months. We anticipate that UBI will be able to gradually improve its risk-adjusted capital (RAC) ratio before adjustments so that it is comfortably above 5% by year-end 2020 by increasing internal capital generation and decreasing nonperforming exposures (NPEs). We also expect that UBI's NPE ratio will gradually decline to about 8.5% by year-end 2021, and remain slightly

...Outlook: Stable S&P Global Ratings' stable outlook on Italian bank UBI Banca SpA reflects balanced risks to our ratings over the next 24 months. We anticipate that UBI will be able to gradually improve its risk-adjusted capital (RAC) ratio before adjustments so that it is comfortably above 5% by year-end 2020 by increasing internal capital generation and decreasing nonperforming exposures (NPEs). We also expect that UBI's NPE ratio will gradually decline to about 8.5% by year-end 2021, and remain slightly below the domestic average for the next 24 months. We would downgrade UBI if we expected increasing market pressure to negatively affect the bank's already-fragile profitability and capital position. This could occur if we anticipated that lower internal capital generation would result in UBI's RAC ratio declining below 5% or if we anticipated that prolonged market pressure and increased competition would jeopardize UBI's efforts to improve revenue generation and efficiency, so that it...

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